US enters China’s Africa turf with new rare earth bet

Harena Rare Earths (LON: HREE) has secured US government backing for its Ampasindava rare earths project in Madagascar, underscoring Washington’s strategy to challenge China’s dominance of critical minerals supply chains.

Harena said last week the US International Development Finance Corporation (DFC) committed up to $4.84 million for pilot plant work, laboratory testing and environmental programs, positioning the project for potential future financing. 

A US State Department spokesperson told Reuters on Tuesday the investment aligns with Washington’s strategy to expand US involvement in African mining sectors long dominated by “opaque, predatory investments from our adversaries.” The spokesperson added Madagascar offers opportunities to increase US and allied investment in critical minerals.

“The project fits within that strategy, and we see opportunities throughout the country to increase US and US-aligned investment in the critical mineral sector,” the spokesperson said.

Strategic shift

The Ampasindava ionic clay deposit contains neodymium, praseodymium, dysprosium and terbium; rare earth elements used to manufacture permanent magnets for electric vehicles, wind turbines and defence systems including fighter jets and precision-guided missiles. 

China dominates global rare earth mining and processing and has reinforced its grip on supply chains through export controls, prompting Western governments to seek alternative sources of supply.

Harena expects Ampasindava to produce about 4,000 tonnes of rare earth oxides annually, including 1,700 tonnes of high-value magnet rare earths NdPr and DyTb. Executive chair Ivan Murphy said the company expects to receive an exploitation permit within the next few weeks and remains on track to begin production by mid-2028. 

Processing options

Harena is also evaluating processing options in the US and Europe, with MP Materials (NYSE: MP), USA Rare Earth (NASDAQ: USAR) and Solvay (EBR: SOLB) among potential refining partners.

Although the DFC commitment represents only a small portion of the project’s estimated $150 million development cost, Murphy said it could pave the way for more substantial US financial support as the project advances toward construction. A DFC official confirmed the agency could consider additional financing, subject to due diligence and regulatory approvals.

The project reflects a broader shift in Africa’s critical minerals sector. While Chinese companies have dominated investment in the continent’s copper, cobalt and lithium industries for years, Western governments are increasingly backing rare earth developments to diversify supply chains for strategically important minerals.